The eyes and boots of the investor

Jacek Wachowicz, co-owner, Warsaw Property Partners: From my experience of working for real estate funds and private equity investors in the past, investors don’t necessarily need to have their own operations in every specific market they invest in and instead they like to work with a local operating partner. It’s basically a local partner who takes care of your investment from start to finish. This would usually be a value-add type of investment, such as, for example, where the investment encompasses the change of use of a building or the major redevelopment of an existing building. In some cases, it could well be value-add asset management services for standing investments, where the value can be enhanced through leasing management, marketing management, or deploying some capex without any major redevelopment. Thus the scope of work can be either as wide as you alluded to, including the concept design, acquisition, underwriting, due diligence, and then the actual construction of the project and exit from the investment, or it can be just one or a few of those services, too. In each case, a local operating partner is the investor’s boots on the ground as well as his eyes and ears in business. At WPP we aim to provide a one-stop shop service for investors in Poland.

What have you done so far?

Christian Fojtl, co-owner, Warsaw Property Partners: One of the first projects we did as WX Management Services was the refurbishment of the TPSA building [now Spektrum] on ul. Twarda in Warsaw. In order to convert the building from single tenant use to a multi-tenant office tower and to make it more modern, welcoming and attractive for its users, we carried out extensive refurbishments of the common areas and building’s retail/service space. We replaced the entrance, the façade, the layouts of the floors and the elevators. As a result, we managed to transform the image and the appearance of the building.

What was actually your input into that project?

CF: Spektrum is a good example of what Jacek said earlier. In this case an investor had a project, it teamed up with us, we worked out the strategy together, carried it out, redesigned the project, managed to completely reposition it, re-leased it, and then put it on the market and sold it. We did the same with an office building in Kraków, the K1 tower, which had also been a single tenant building. Here we were involved in drawing up the product strategy. Another example of this is the Radisson in Warsaw.

Your firm has recently been renamed, changing from WX Management Services to WPP, which stands for Warsaw Property Partners. Why the need for this change?

CF: The company originated as a subsidiary of Warimpex under the name of WX Management Services. I bought a 50 pct stake in the company in 2013 and last year bought the remaining shares. Starting from this year, Jacek, myself and Bartosz Bzoma will be the shareholders and the managing directors of this company. And as part of this process we are also changing the name to WPP. Although Warimpex no longer has a direct shareholding, we are still on very good business terms with them.

What are your plans now?

JW: There will be no change to the existing services we provide. But we now have an increased capacity, as there are three managing partners of the company with different skill sets and track records – and we want to do more deals with equity partners.

And is it now a good time to invest? The market seems to be shifting or is about to shift.

CF: The market is always changing, so I think it’s important never to be too optimistic when the market looks very promising – or too pessimistic when the market is difficult. I think what we’ve been doing and what we want to do are good projects based on feasible business plans, not on wildly optimistic future forecasts. If a downturn occurs– and one will come along sooner or later, then I think that if you work on the right kind of project and do it the right way, you’re in a better position to survive these recessions and your projects will survive too. And these are the sort of projects we want to do. Furthermore, difficult assets and assets going through difficult times need strong active management. That is also a service we will provide to our partners.